US stocks were on the edge this week as investors waited for the Jackson Hole Symposium, an annual gathering of central bankers and economists. The S&P 500 index rose by just 0.50%, its smallest weekly gain this month. Similarly, the Dow Jones rose by 0.37% while the Nasdaq 100 rose by 0.14%.
Powell, the Fed Chair, is expected to hint that the bank will start cutting interest rates in its September meeting. The case for rate cuts intensified after the Bureau of Labor Statistics (BLS) revised downwards the number of jobs added for the 12 months through March to 818,000.
This revision meant that the labor market is weaker than expected, which could push the Fed to deliver a bigger cut than the expected 0.50%. US equities do better when the Fed is cutting interest rates since investors move from low-yielding government bonds to stocks.
Marathon Digital (NASDAQ: MARA)
Background
Marathon Digital is the biggest Bitcoin mining company by market capitalization. It has three mines in Texas, which are mostly powered by renewable energy sources. It made over $387 million in annual revenues in 2023 and $565 million in the trailing twelve months.
Summary
Marathon Digital stock rose by 2.5% this week as investors watched Bitcoin’s performance. Bitcoin remained in a consolidation phase for the third consecutive week. It rose to a high of $61,800, and analysts expect that it will have a bullish breakout since it has formed a small bullish pennant pattern.
As we wrote on Monday, there are signs of accumulation in the Bitcoin market as companies like Goldman Sachs, Millennium Management, and Morgan Stanley have bought spot ETFs. Marathon Digital and other mining companies do well when Bitcoin is rising.
The company will also benefit from its diversification efforts. It has started mining alternative coins like Kaspa and is considering moving to the AI industry.
Review date: 19th August
Hype change: 86%
Price change: 2.5%
Sentiment: POSITIVE
Airbnb (ABNB)
Background
Airbnb is one of the leading companies in the travel industry with a market cap of over $74 billion. It runs a platform that lets people book residences globally.
Airbnb has the biggest market share in an industry it created in 2008. However, competition in the sector has grown, with firms like TripAdvisor, Booking, and Expedia offering similar solutions.
As a result, the company’s stock has dropped by 14% this year and by 9.15% in the last 12 months. In that period, the S&P 500 and Nasdaq 100 indices have jumped to a record high.
Summary
Airbnb published weak quarterly results earlier this month, providing further evidence that the travel industry was slowing. Its revenue rose by 11% to $2.75 billion while its profitability dropped to $555 million.
The company is pegging its growth prospects to more research and development (R&D), including the upcoming launch of its co-hosting marketplace in October. It also hopes to relaunch the experiences, which are hosted activities offered by local experts through its platform. Some of the potential activities are photography and guided tours.
The management believes that this business is largely untapped and has more room to grow in the next few years.
However, as we warned on Tuesday, the stock is at risk as investors wait for more clarity about its business transformation.
Review date: 20th August
Hype change: 102%
Price change: -1.43%
Sentiment: POSITIVE
Palo Alto Networks
Background
Palo Alto Networks is the biggest company in the cybersecurity industry with a market cap of over $116 billion. Its cybersecurity solutions are used by the biggest companies in the world like JP Morgan, Google, Cleveland Clinic, Home Depot, Walmart, and ExxonMobil. It generates over $8 billion in annual revenues.
Summary on the Palo Alto Networks stock
Palo Alto Networks stock has done well recently after it published strong results and boosted its forward guidance. These results were unlike those it released in February when it warned that its business was slowing.
The company has also hinted that it was benefiting from the large CrowsdStrike outage that affected companies in all industries. It is also a big beneficiary of the ongoing trend of platformization where firms are consolidating their software providers.
Review date: 21st August
Hype change: 96%
Price change: 3%
Sentiment: POSITIVE
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